Advanced

Old is gold? The effects of employee age on innovation and the moderating effects of employment turnover

Schubert, Torben LU and Andersson, Martin LU (2015) In Economics of Innovation and New Technology 24. p.95-113
Abstract

There is consistent evidence in the literature that an average employee's age is negatively related to firm-level innovativeness. This observation has been explained by older employees working with outdated technological knowledge and being characterized by reduced cognitive flexibility. We argue that firms can mitigate this effect through employee turnover. In particular, turnover of R&D workers is deemed a vehicle for transfer of external knowledge to the firm, which can compensate for lower cognitive flexibility and up-to-date knowledge among older workers. We use a matched employer–employee data set based on three consecutive Community Innovation Survey surveys for Sweden to test our predictions. Our results suggest (a) that... (More)

There is consistent evidence in the literature that an average employee's age is negatively related to firm-level innovativeness. This observation has been explained by older employees working with outdated technological knowledge and being characterized by reduced cognitive flexibility. We argue that firms can mitigate this effect through employee turnover. In particular, turnover of R&D workers is deemed a vehicle for transfer of external knowledge to the firm, which can compensate for lower cognitive flexibility and up-to-date knowledge among older workers. We use a matched employer–employee data set based on three consecutive Community Innovation Survey surveys for Sweden to test our predictions. Our results suggest (a) that overall employee age impacts negatively on product innovation activities (both in terms of propensity and success), (b) that the effect of employee staying rate (measured by the share of employees who remain in the firm from one year to the next) on innovation follows an inverted U-shape implying an ‘optimal’ level of employment turnover and (c) that this ‘optimal’ value is lower for firms with older employees. The latter suggests that firms with older employees can at least partially compensate an aged workforce by increased employment turnover.

(Less)
Please use this url to cite or link to this publication:
author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
ageing, employee age, firm performance, human capital, innovation, R&D
in
Economics of Innovation and New Technology
volume
24
pages
19 pages
publisher
Taylor & Francis
external identifiers
  • Scopus:84911480294
ISSN
1043-8599
DOI
10.1080/10438599.2014.897858
language
English
LU publication?
yes
id
aca5e9bf-5b76-42c7-8959-6ea4dbaf26ab
date added to LUP
2016-05-18 13:28:26
date last changed
2016-06-13 12:32:35
@misc{aca5e9bf-5b76-42c7-8959-6ea4dbaf26ab,
  abstract     = {<p>There is consistent evidence in the literature that an average employee's age is negatively related to firm-level innovativeness. This observation has been explained by older employees working with outdated technological knowledge and being characterized by reduced cognitive flexibility. We argue that firms can mitigate this effect through employee turnover. In particular, turnover of R&amp;D workers is deemed a vehicle for transfer of external knowledge to the firm, which can compensate for lower cognitive flexibility and up-to-date knowledge among older workers. We use a matched employer–employee data set based on three consecutive Community Innovation Survey surveys for Sweden to test our predictions. Our results suggest (a) that overall employee age impacts negatively on product innovation activities (both in terms of propensity and success), (b) that the effect of employee staying rate (measured by the share of employees who remain in the firm from one year to the next) on innovation follows an inverted U-shape implying an ‘optimal’ level of employment turnover and (c) that this ‘optimal’ value is lower for firms with older employees. The latter suggests that firms with older employees can at least partially compensate an aged workforce by increased employment turnover.</p>},
  author       = {Schubert, Torben and Andersson, Martin},
  issn         = {1043-8599},
  keyword      = {ageing,employee age,firm performance,human capital,innovation,R&D},
  language     = {eng},
  month        = {02},
  pages        = {95--113},
  publisher    = {ARRAY(0x8c78c60)},
  series       = {Economics of Innovation and New Technology},
  title        = {Old is gold? The effects of employee age on innovation and the moderating effects of employment turnover},
  url          = {http://dx.doi.org/10.1080/10438599.2014.897858},
  volume       = {24},
  year         = {2015},
}